Last Sunday the STEP elections (acronym for Primary, Open, Simultaneous and Compulsory). In them, the libertarian candidate Javier Milei obtained surprising results. He was the most voted with just over 30% of the votes.
First I will tell you briefly how do these STEP work (it’s important) and then we go with some data and keys From the results.
What do you have to know?
The PASSED are considered de facto a first round of the Argentine presidential elections, which will be held on October 22. If there is a second round or runoff, we will go to November 19. Son Primary because from them comes the candidate of each party for the next elections; open because any voter can participate, not just party members; Simultaneous because they are celebrated at the same time; and Mandatory because all parties must attend them, as well as voters participate. A couple more details: there is a 1.5% minimum threshold of the votes to be able to participate in the elections. Furthermore, even parties that only present one candidate must appear at these STEP. This is the case of Milei and its La Libertad Avanza platform.
I leave you a graph with the results and we continue with more keys:
Now a little who is who:
Javier Milei. Economist. Of libertarian ideology with anarcho-capitalist features. He considers a minimum State, and that the rest of the functions must be developed by the market or the freedom of individuals without any type of regulation. He has proposed everything from the dollarization of Argentina to the sale of organs through a populist speech against the caste. It is not like Trump, Bolsonaro or Bukele. It’s totally different.
Patricia Bullrich. She was former Minister of Security between 2015 and 2019 in the Macri Government. He belongs to one of those dynasties of politicians so common in Latin America. His profile is quite classic on the right: liberal economically and tough on security.
Sergio Massa. Current Minister of Economy of Argentina. A centrist profile within Kirchnerist Peronism. I translate: he has tried to maintain a technical and independent profile in the personalistic framework that has developed around Kirchnerism. For example, in the conjunction between economy and foreign policy (trade policy, regionalism, etc.) he has a continuity profile. His handicap: He is the Minister of Economy of a country with 114% inflation.
Because it is important?
The results have surprised. Such high support for Milei was not expected. It was assumed that she would get 20-25% of the support, not 30%. Likewise, the results of the ruling party have disappointed.
The most common reading of support for Milei is the protest vote. It is doubtful that that 30% is real support for the candidate. The interpretation is that, in a climate of strong polarization and bad economic situation, a good part of the electorate has sent a message to the two main parties.
The situation in Argentina is bad. The campaign has revolved around very polarizing issues, such as security or the economy. It should not be ignored that a growing part of the electorate is disenchanted and increasingly in favor of proposals that break with everything.
What to expect?
The more real opportunities there are for Milei to win the elections, the worse the country will be in.. The markets did not react well to his victory. The next day, the Central Bank had to raise interest rates 21 points, from 97% to 118%, due to the collapse of the exchange rate.
There can only be two left. The presidential elections in October will be close. To win in the first round there are two requirements: obtain 45% of the vote or, if more than 40% is obtained, get ten points ahead of the second. This will encourage strategic vote facing a second round.
Combinations? If Milei has a borrowed vote, it is possible that Bullrich and Massa will face each other in the runoff. If Milei manages to retain the vote and go to the second round, either against Bullrich or Massa, it would probably create an effect rally ’round the flag against them, as happens in France. The rest of the electorate would support the candidate less bad.
📰 What you should (also) know this week
🧑⚖️ Another accusation for Trump. No, we have not made a mistake and repeated last week’s news. Donald Trump has been impeached for the fourth time, this time in Georgia.
Because it is important? This is one of the most delicate accusations that Trump faces because it refers to the attempt to manipulate the election results. Among the accusations against him and members of his team are violation of the law against organized crime, attempted impersonation of an official, or conspiracy to present false documents. These types of crimes are delicate in the face of the most centrist electorate, which does not justify these acts as the most Trumpist wing of the party can do.
As we already mentioned, the trials will be held during the primaries and, for the moment, it does not seem that these cases are negatively affecting the Republican candidate. Trump, once again, has not hesitated to fan the theory of persecution and victimize himself. A common strategy for him and one that resonates with his followers. Furthermore, looking at the polls it seems that it is working for him: he has a big advantage over his main rival within the party, Ron de Santis, and ties with Joe Biden.
📉The ruble continues in free fall. This week the ruble reached 100.18 rubles per dollar, the lowest figure since March 2022. Since the end of July, the Russian currency has lost about 8% and has depreciated 27% since the beginning of 2023.
Because it is important? That the ruble exceeds the psychological barrier of $100 is a red line for the Kremlin. Until now they had played with a weak ruble that would allow them to face the sanctions. However, a ruble that is too weak can put a lot of economic pressure on consumers, generating discontent with the authorities.
One of the main reasons behind the loss of the ruble’s weight is the drop in exports. With the beginning of the invasion of Ukraine, exports, especially of gas and oil, have fallen. Russian authorities have played with currency depreciation to control the economic impact of war and sanctions. But always very careful to avoid inflation and a rise in prices. For this reason, this week the Russian Central Bank has come to the rescue of the ruble by raising interest rates.